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Judge rules in Rivian's favor in lawsuit over direct sales to consumers

Blue Rivian R1T
Emily Bollinger
WGLT file
Rivian is making its electric trucks, SUVs, and vans at its Normal manufacturing plant, where it employs over 5,800 people. It’s rapidly become McLean County’s second-largest employer.

A judge has dismissed a lawsuit filed against Rivian by a group of Illinois auto dealers who alleged the electric automaker was breaking the law by selling vehicles directly to consumers.

That ruling in Cook County court allows Rivian to continue selling electric trucks and SUVs to customers in Illinois. It’s part of a broader fight that Rivian and EV pioneer Tesla have waged state by state, looking for the legal ability to bypass dealer franchise laws and sell direct-to-consumer.

In his Dec. 19 ruling, Judge David B. Atkins dismissed the lawsuit from the Illinois Automobile Dealers Association. He said there was no apparent legislative intent to prohibit manufacturers from being able to sell directly to consumers.

“The legislature had extensive opportunities to exclude manufacturers from dealing vehicles: in the definitions of those terms, in the requirements to obtain a dealer license, or elsewhere in the statute. They did not do so, and the court declines to nevertheless read such an exclusion into the law via a tortured application of inapplicable requirements,” Atkins wrote.

The Illinois Automobile Dealers Association (IADA) argued state law prohibits manufacturers from running a new-vehicle franchise. The trade group and its allies said “independent dealers are vital to the state’s economy and safety and underly the legislature purpose behind the Vehicle Code and the (Illinois Motor Vehicle Franchise Act).” They argued the Illinois Secretary of State’s office has “abandoned its enforcement role” and “bowed to political pressure” by agreeing to lessen its licensing requirements for certain new-to-the-market manufacturers, first Tesla and now Rivian.

Rivian argued the auto dealers undercut their own argument against direct sales by entering into an agreement with Tesla in 2019 allowing it a limited number of dealer licenses.

Atkins sided with Rivian.

“The automobile industry may have largely adopted the ‘Established Franchise System’ over many decades, and Illinois law may have even been updated to reflect and better regulate that reality,” Atkins wrote. “But that law does not mean it ever required such a system, or that the (Auto Dealers) have any claim for generalized harms to the usual ways of business.”

The Illinois Automobile Dealers Association plans to appeal the ruling, executive director Joe McMahon told WGLT on Thursday. In a previous statement, the group criticized the process by which the judge reached his decision.

“Disappointingly, after sitting on all of the parties’ various motions for over a year and after admitting less than a week ago that the matter had slipped through the cracks, the judge issued an order dismissing the lawsuit without providing the opportunity for oral argument. The order was brief and contained little analysis," IADA said in a Dec. 22 post on its website.

Rivian is making electric trucks, SUVs, and vans at its Normal manufacturing plant, where it employs more than 5,800 people. It’s rapidly become McLean County’s second-largest employer behind State Farm.

Rivian declined to comment Thursday on the ruling.

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Ryan Denham is the digital content director for WGLT.
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